Providing complete and accurate information to the reconciliation manager

This case study looks at a participant’s failure to take all practicable steps to ensure information it provided to the reconciliation manager was accurate. This resulted in an alleged breach of the Electricity Industry Participation Code 2010.

Background

The Electricity Industry Participation Code 2010 (Code) requires participants to provide complete and accurate information to the reconciliation manager. Strict compliance with this obligation is required. Incorrect information could adversely impact the market, consumers, and the participant itself.

Participants must ensure information submitted is complete and accurate as required by clause 15.2(1)(a) of the Code. The information must be delivered by 4:00pm of the fourth business day and the thirteenth business day of each reconciliation period, as required by clause 15.4 of the Code.

Code provisions

15.2 Requirement to provide complete and accurate information

(1) A participant must take all practicable steps to ensure that information that the

participant is required to provide to any person under this Part is—

(a) complete and accurate; and

(b) not misleading or deceptive; and

(c) not likely to mislead or deceive.

Participants must take all practicable steps to ensure information provided is complete and accurate

Part 15 of the Code requires reconciliation participants to gather, store and provide information about electricity conveyed.

Section 15.2(1)(a) of the Code requires participants to take all practicable steps to provide information which is complete and accurate.

A case study where inaccurate information was provided

On 6 March 2024, a participant submitted information to the reconciliation manager for its initial submission information for February 2024. The information was submitted on time to the reconciliation manager. However, on 7 March 2024, the reconciliation manager asked the participant to check the submission because it seemed the half-hourly (HHR) submission volume for one network supply point (NSP) was incorrect.

The participant had manifestly overestimated its HHR submission for the identified NSP. The submission was 13 times more than the entire balancing area the reconciliation manager was reconciling.

The cause was a residential meter that was not transmitting data. The ICP at this meter had a maximum possible consumption of 11.5kWh, however an error in estimation resulted in over 400,000kWh being submitted to the reconciliation manager.

Corrected files were sent to the reconciliation manager before the run was processed and published. However, the reconciliation manager notified the Electricity Authority Te Mana Hiko (Authority) of an alleged breach as the participant failed to submit accurate information by 4:00pm on the fourth business day.

The Authority began looking into the allegation and during this time, the participant accepted it had breached the Code.

The Authority determined no further action was required under regulation 11(1)(c) of the Electricity Industry (Enforcement) Regulations. However, a warning was issued to the participant as it had not demonstrated it took all practicable steps to ensure information provided was complete and accurate.

The Authority met with the participant to better understand how a submission with such a large overestimation could have been missed.

The participant confirmed the affected meter was now communicating correctly and the issue was resolved. However, the preventative measures the participant had in place may not have been enough to avoid a reoccurrence. The participant therefore changed its processes so any residential ICP half-hourly consumption above 40kWh would be flagged.

Analysis

When considering an alleged breach, the Authority considers the participant’s breach history (amongst other matters). The participant in this case had not previously breached this Code provision.

The Authority had to determine whether all practicable steps had been taken by the participant due to the severity of the overestimation. When the Authority met the participant it was able to explain why the steps the participant had planned to stop recurrence may not have been enough. The Authority was also able to determine appropriate steps that can be taken at each step of the process when filing a submission.

Lessons learned

Information accuracy is critical for reconciliation. When information is inaccurate, it may adversely impact participants within the balancing area, and the reconciliation manager.

Had the reconciliation manager not asked the participant to resubmit, the participant was at risk of a significant over submission, estimated to be around $9 million. In this case, because of the over-submission, unaccounted for electricity (UFE) would only have been beneficial to other participants in the balancing area. This is because other participants would have been allocated negative UFE, which is similar to a credit.

It is likely the participant would then either raise an invoice or volume dispute. This in turn would impose additional costs and operational overhead on the reconciliation manager to resolve. The over-submission would have materially increased the participant’s settlement and market prudential obligations.

The impact on the reconciliation manager from this single event was small, with the reconciliation process being delayed because of the error. However, dealing with numerous inaccurate information submissions from multiple participants would increase operational costs to the reconciliation manager.

It is the participant’s responsibility to make sure information to the reconciliation manager is complete and accurate. The overestimated submission was caused by a non-communicating meter. The meter showed inconsistent communication for over four months. Delays in resolving meter issues increase the risk of errors.

Participants should implement methods to ensure enough checks are completed to identify and correct any abnormal readings before submitting information to the reconciliation manager.

Examples of practicable steps to ensure complete and accurate information is provided include checking:

• estimated data is consistent with the consumption patterns for the type of ICP
• consumption periods which fall outside expected consumption patterns
• the ICP and the meter/register are active and correct before submitting
• half-hourly data is accurate, taking into account non-communication periods or potential invalid data received from the metering equipment provider.